Stock Symbols: AEM (NYSE and TSX) TORONTO, Feb. 21
/PRNewswire-FirstCall/ -- Agnico-Eagle Mines Limited today reported
fourth quarter earnings of $41.9 million, or $0.35 per share. This
compares to net earnings of $11.7 million, or $0.13 per share, in
the fourth quarter of 2005. The fourth quarter 2006 earnings were
positively affected by a non-cash foreign exchange translation gain
of $7.4 million, or $0.06 per share, and were negatively affected
by a loss of $2.7 million, or $0.02 per share, on zinc forward
sales. The zinc forward derivative contracts have now expired. In
the fourth quarter of 2006, Agnico-Eagle realized record cash
provided by operating activities of $84.5 million. This compares
with $24.6 million recorded in the corresponding quarter of 2005.
The increase is largely due to higher realized metals prices and
increased gold and zinc production. Earnings for the full year 2006
were a record $161.3 million, or $1.40 per share. This is more than
triple the per share earnings of $0.42, or $37.0 million, recorded
in 2005, largely as a result of stronger metals prices. The
Company's financial position was further strengthened with cash and
cash equivalents of $458.6 million at December 31, 2006, up $27.7
million from September 30, 2006. Record quarterly cash provided by
operating activities of $84.5 million more than covered capital
expenditures during the quarter of $53.3 million. Payable gold
production in the fourth quarter of 2006 was 66,022 ounces at total
cash costs per ounce(1) of minus $868. This compares with payable
gold production of 63,022 ounces at total cash costs per ounce of
minus $22 in the fourth quarter of 2005. Payable gold production
for 2006 was slightly higher than the prior year at 245,826 ounces
at total cash costs per ounce of minus $690, up from 241,807 ounces
at total cash costs per ounce of $43 in 2005. The gold production
estimate for 2007 is essentially unchanged as LaRonde is operating
at steady state of approximately 240,000 ounces per year.
Highlights for the quarter include: - Record gold reserves of 12.5
million ounces, an increase of 19% over prior level - Strong
earnings of $41.9 million, or $0.35 per share, contributing to
record annual earnings of $161.3 million, or $1.40 per share -
Record cash provided by operating activities of $84.5 million,
contributing to record annual cash provided by operating activities
of $226.3 million - Low total cash costs per ounce at LaRonde of
minus $868, contributing to record low annual total cash costs per
ounce of minus $690 - A record 23 consecutive months without a lost
time accident underground at LaRonde "The strong performance of our
low cost LaRonde Mine, combined with higher metal prices, has
helped Agnico-Eagle to generate record annual earnings and cash
flows. We continue to add value through reserve additions and by
advancing the construction of three new gold projects towards
initial production next year," said Sean Boyd, Vice-Chairman and
Chief Executive Officer. "Once again, many thanks to our employees,
whose expertise and enthusiasm has resulted in the strong quarterly
and annual results, and the ongoing success of our company," added
Mr. Boyd. Conference Call Tomorrow The Company will host its
quarterly conference call tomorrow, February 22, at 2:00 pm E.S.T.
Management will review the Company's financial results for the
fourth quarter and full year 2006 and provide an update of its
exploration and development activities. Via Telephone: To
participate in the conference call, please dial (416) 644-3415,
Toll Free 800-732-9307. To ensure your participation, please call
approximately five minutes prior to the scheduled start of the
call. Via Webcast: Additionally, a live audio webcast of the call
will be available on the Company's website homepage at
http://www.agnico-eagle.com/. Replay archive: Please dial the
toll-free access number 877-289-8525, passcode 21216609 (followed
by the number sign). The conference call will be replayed from
Thursday, February 22, 2007 5:00 pm E.D.T. to Saturday, March 3,
2007 11:59 pm E.S.T. The webcast along with presentation slides
will be archived for 180 days on the website. Gold Reserves at
Record Level At year end 2006, the Company's gold reserves totaled
12.5 million ounces, an increase of 19% over 2005 levels. The
largest increase came from the conversion of 1.8 million ounces of
mineral resources to mineral reserves at the Pinos Altos project in
Mexico. In 2007 and 2008, it is expected that the overall reserve
figure for Agnico-Eagle will continue to grow as the Company
continues to convert its resource to reserves, and continues the
exploration of its properties. Agnico-Eagle's goal is to increase
gold reserves, from the existing portfolio of mines and projects,
to 14 million to 15 million ounces in the next 12 months. Assuming
the successful acquisition of Cumberland Resources Ltd.
("Cumberland") following the recently announced take-over offer,
the combined gold reserves would immediately rise to over 15
million ounces. Furthermore, the overall gold reserve objective
would rise to 18 million to 20 million ounces by the end of 2008.
The main contributors to the anticipated increase in gold reserves
and further gold resource increases are likely to be: - Conversion
of Agnico-Eagle's current resources to reserves - Depth extension
of the Main zones at Kittila - New gold zones to the north of the
Kittila reserve - Depth extensions of the Santo Nino and Cerro
Colorado zones at Pinos Altos - New gold zones in the Carola area
to the northwest of the Pinos Altos reserve - Cumberland's current
reserve of 2.9 million ounces (see appended table) A summary of the
Company's year end 2006 and 2005 gold reserves follows:
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Gold Reserve Summary Proven & Probable Reserve (000's ounces)
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2006 2005
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LaRonde 5,151 5,308 Goldex 1,689 1,641 Lapa 1,152 1,168 Kittila
2,616 2,325 Pinos Altos 1,837 0 Other 17 1 -- - Total 12,462 10,442
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Tonnage amounts and contained metal amounts presented in the tables
in this news release have been rounded to the nearest thousand. See
following section titled "Detailed Mineral Reserve and Resource
Data". The assumptions used in calculating the 2006 reserves and
resources were $486 per ounce gold, $8.69 per ounce silver, $1,962
per tonne zinc, $4,388 per tonne copper, a C$/US$ exchange rate of
1.21, a US$/Euro exchange rate of 1.25, and a Mexican Peso/US$
exchange rate of 11.02. For every 10% change in the gold price
(leaving all other assumptions unchanged), there would be an
estimated 2.0% change in proven and probable reserves. The metals
prices and exchange rates used in the reserve and resource
calculation are the trailing three year averages for such prices or
rates in each case, as mandated by the U.S. Securities and Exchange
Commission. The significant byproduct reserves and resources for
silver, zinc and copper, contained in the LaRonde ore body, and the
silver reserves contained at Pinos Altos, are presented in the
Detailed Mineral Reserve and Resource Data section set out below,
and are not included in Agnico-Eagle's gold reserve and resource
totals. Please see this section for more detailed reserve and
resource estimates for all the Company's properties. Agnico-Eagle's
proven and probable byproduct reserves total approximately 105
million ounces of silver, 730,000 tonnes of zinc and 111,000 tonnes
of copper. LaRonde Mine - Strong Performance Continues The LaRonde
mine processed an average of 7,450 tonnes of ore per day in the
fourth quarter of 2006, compared with an average of 7,320 tonnes
per day in the corresponding period of 2005. LaRonde has now been
operating at an average of approximately 7,300 tonnes per day for
over three years, continuing to demonstrate the reliability of this
world class mine. Minesite costs per tonne(2) were C$63 in the
fourth quarter. These costs are higher than the C$56 per tonne
experienced in the fourth quarter of 2005. Costs were negatively
affected by cost escalation for inputs such as fuel, reagents,
steel, cement, and also by the processing of some ore
(approximately 35,000 tonnes) from its adjacent Bousquet property
where the mining costs per tonne are significantly higher.
Additionally, during the quarter, LaRonde crews performed 28% more
operating lateral development than planned, adding to the cost of
the overall operation. While the accelerated development seen over
the past several quarters increases expenditures over the original
plan, a decision was made to increase the number of available
mining blocks at any given time at LaRonde. Improved flexibility
has contributed to the strong ore production performance at the
mine over the past several years For the full year of 2006, the
minesite costs per tonne were C$62, up from C$55 per tonne in 2005,
largely due to the previously mentioned factors, and combined with
the accelerated mine development and cost increases common in the
industry. Minesite costs per tonne are expected to be approximately
C$63 for the full year 2007, two percent higher than 2006 due to
expected general inflation rate increases, offset somewhat by lower
reagent consumption in the mill due to improvements in the
copper-zinc circuit. On a per ounce basis, net of byproduct
credits, LaRonde's total cash costs per ounce remained very low by
industry standards, at minus $868 in the fourth quarter. This
compares favourably with the results of the fourth quarter of 2005
when total cash costs per ounce were minus $22. The main reason for
the decrease in total cash costs per ounce is the significantly
higher byproduct metal prices and increased zinc production
realized in 2006. As previously disclosed, LaRonde's full year 2007
production forecast remains at an estimated 240,000 ounces of gold,
4.7 million ounces of silver, 76,000 tonnes of zinc, and 8,700
tonnes of copper. Total cash costs per ounce of gold production for
the year are expected to be significantly less than nil, at current
byproduct metal prices. Cash Position Continues to Grow, Despite
Large Investments in Gold Growth Cash and cash equivalents grew to
$458.6 million at December 31, 2006 from the September 30, 2006
balance of $430.9 million, as the strong cash generating
performance from LaRonde exceeded capital expenditures on the
Company's development projects. The Company maintains substantially
undrawn bank lines of $300 million. The Company had approximately
121.0 million shares outstanding and no long term debt at December
31, 2006. During the quarter, Agnico-Eagle added a record $84.5
million of cash provided by operating activities. Major capital
expenditures in the quarter included $20.5 million on the
construction of Goldex, $11.8 million at Kittila, and lesser
amounts at the other development projects. For the full year 2007,
capital expenditures are expected to total approximately $336
million (as detailed in the December 14, 2006 press release).
Additionally, a construction decision is expected to be made on the
Pinos Altos project in the second quarter, which would increase the
expected 2007 capital expenditures. With a large cash balance,
strong cash flows, no long term debt, and excellent financial
flexibility, Agnico-Eagle is well funded for the development and
exploration of its pipeline of gold development projects in Canada,
Finland and Mexico. Four Gold Projects Under Construction, Fifth in
Feasibility Stage At the 100% owned Goldex mine project in
northwestern Quebec, Agnico-Eagle commenced construction in July
2005. Proven and probable reserves of 1.7 million ounces of gold
(22.9 million tonnes grading 2.3 grams per tonne) are estimated to
be sufficient for a ten year mine life with annual production
averaging 170,000 ounces at total cash costs of approximately $225
per ounce. The capital cost of construction is estimated to total
$135 million, of which $65 million had been incurred as at the end
of December 2006. First gold production is expected in the second
quarter of 2008. The construction of the surface facilities is
advancing quickly with the compressor building, warehouse, service
and mill buildings largely completed. The surface facilities are
estimated to be 78% completed. Underground, approximately 25% of
the lateral development is complete on the project, while just over
50% of the ventilation raising is complete. The production shaft is
currently down to a depth of 336 metres, towards a final planned
depth of 857 metres. Approximately 15,000 tonnes of ore were
extracted and stockpiled in the quarter. The total ore stockpile
now stands at approximately 97,000 tonnes. Exploration drilling at
Goldex has yielded an intriguing drill hole, DH 73-366, located
below and to the east of the current gold resource envelope. This
hole has an intersection of 2.9 grams per tonne over a true
thickness of 80.0 metres. This suggests that the Goldex orebody is
open for further expansion. The Company is planning to further
explore this area in 2007.
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True Thickness From To Gold Drill Hole Zone (metres) (metres)
(metres) (g/t)
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73-366 GEZ South 80.0 83.8 208.6 2.9
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http://www.agnico-eagle.com/files/PR-Goldex.pdf Construction
commenced at the Kittila mine project in northern Finland in the
second quarter of 2006 with first production expected in the second
half of 2008. The project is expected to produce an average of
150,000 ounces of gold per year at total cash costs of
approximately $250 per ounce, over an estimated 13 year mine life.
Kittila has probable gold reserves of 2.6 million ounces (16.0
million tonnes grading 5.1 grams per tonne), an increase of 300,000
ounces over the prior year. The capital costs of construction are
estimated to total $135 million of which approximately $21 million
had been incurred at December 31, 2006. Work on site infrastructure
is progressing well and a "corner stone" was laid in a ceremony
with local and Finnish government officials on October 26, 2006.
The high voltage power line and sub-station are fully operational.
Surface overburden stripping for the open pits is well advanced
with approximately 176,000 cubic metres removed to date.
Approximately one million tonnes of waste rock has been excavated
as well. Much of this rock will be used in road and tailings dam
construction. The underground decline had advanced approximately
400 metres to date. Exploration drilling continues along the 15
kilometre long Suurikuusikko trend. Six drills are currently
operating on the property, three on in-fill drilling and three on
exploration targets. The in-fill drill holes, focusing on the
Kittila project site, have largely confirmed the previous results.
Included in the reserve update are results including hole 06044
which returned 9.0 g/t over 20.6 metres (true width) at a depth of
60 metres, and hole 06102 which returned 12.0 g/t over 26.0 metres
at a depth of approximately 360 metres from surface. Additionally,
there have been some recently assayed ore grade intersections which
have not been incorporated into the updated reserve.
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True Thickness From To Gold Drill Hole Zone (metres) (metres)
(metres) (g/t)
-------------------------------------------------------------------------
06044 Main 20.6 77.35 106.80 9.0
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06102 Main 26.0 441.45 478.55 12.0
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http://www.agnico-eagle.com/files/PR-Kittila.pdf Exploration, via
geochemical sampling north of the Kittila project, has resulted in
the discovery of two more new anomalies that will be drill tested
in the next several months. At the 100% owned Lapa project in
northwestern Quebec the final phase of construction commenced in
the second quarter of 2006. Probable gold reserves of 1.2 million
ounces (3.9 million tonnes grading 9.1 grams per tonne) are
expected to support estimated annual production of 125,000 ounces
per year at total cash costs per ounce of approximately $210. A
seven year mine life is expected with capital costs of construction
of approximately $110 million (including $20 million spent prior to
the decision to proceed with the second phase of development), of
which approximately $33.0 million has been spent as of year end
2006. Gold production at Lapa is expected to begin in the fourth
quarter of 2008. Underground diamond drilling continues, with one
drill targeting areas inside the current resource envelope, at
depth on the Contact South Zone. The shaft at Lapa is currently at
a depth of 1,094 metres below surface, towards the currently
planned depth of 1,370 metres. Construction of the surface service
facilities is underway. At the 100% owned LaRonde mine in
northwestern Quebec, construction commenced in the second quarter
of 2006 on the infrastructure extension at depth. Proven and
probable reserves are expected to support a mine life through 2020.
Annual gold production post-2011, when the deeper ore is accessed,
is anticipated to average 320,000 ounces at total cash costs per
ounce of approximately $230. The capital cost of construction is
anticipated to be $210 million with approximately $6.5 million
spent as of year end 2006. The focus during the quarter was on
underground infrastructure construction, hoist procurement and
detailed engineering. The three hoists have been acquired and are
being refurbished. Excavations for the sinking hoist are complete
and work has started on the hoist foundations. At the 100% owned
Pinos Altos project in northern Mexico, a $26 million exploration
program is underway and includes provision to produce the
feasibility study for the project. The base case feasibility study
has been completed, with optimization, third-party review and a
Board decision regarding production is expected in the second
quarter. Gold and silver production at Pinos Altos could begin in
the first half of 2009. At Pinos Altos, the reserve and resource
tonnage grew significantly as a result of further drilling and the
application of lower cut-off grades due to a higher gold price
being used in the calculation ($486 per ounce in 2006 versus $405
per ounce in 2005). Additionally, the inclusion of several silver
rich, but lower grade gold, drill holes has resulted in lower
grades in the reserve and resource, but also resulted in a much
larger economic envelope. As a result of the large increase in
economic tonnage, further optimization studies are underway
regarding the anticipated production rate of the mine.
Environmental baseline reviews and studies have been completed for
the Pinos Altos project, and construction permit applications have
been delivered to the reviewing agencies in Mexico. The Company has
successfully completed negotiations with four communities
surrounding the Pinos Altos project and has purchased 5,500
hectares of land and has entered a separate agreement to lease an
additional 1,500 hectares for a 30-year term. The acquisition of
these surface rights located within the prospective minerals
concessions area controlled by Agnico-Eagle will significantly
enhance the Company's future ability to explore and develop
potential minerals targets in this area. Currently, five drills are
operating on the property. To date, approximately 24,957 metres, or
50% of the program had been drilled. Construction of the permanent
camp is advancing on schedule. A contract has been let for the
construction of the 2,800 metre exploration ramp to commence in
March 2007, while construction of a 1,000 metre airstrip is also
underway. Bid for Cumberland Resources Ltd. On February 14, 2007,
Agnico-Eagle announced a take-over bid to acquire Cumberland.
Please see the press release of that date for further details. If
the acquisition is completed, Agnico-Eagle expects: - its proforma
gold reserves to increase by 23% to 15.4 million ounces,
approximately 70% of which would be located in Canada; - its
projected gold production to rise a further 39% in 2010 to
approximately 1.3 million ounces; - its proforma cash position to
increase to over $550 million, with no additional funding expected
to be required to build its pipeline of five development projects
(1) Total cash costs per ounce is a non-GAAP measure. For a
reconciliation of this measure to production costs as reported in
the financial statements, see Note 1 to the financial statements at
the end of this news release (2) Minesite costs per tonne is a
non-GAAP measure. For a reconciliation of this measure to
production costs as reported in the financial statements, see Note
1 to the financial statements About Agnico-Eagle Agnico-Eagle is a
long established Canadian gold producer with operations located in
Quebec and exploration and development activities in Canada,
Finland, Mexico and the United States. Agnico-Eagle's LaRonde Mine
is Canada's largest gold deposit in terms of reserves. The Company
has full exposure to higher gold prices consistent with its policy
of no forward gold sales. It has paid a cash dividend for 25
consecutive years. Forward-Looking Statements The information in
this press release has been prepared as at February 21, 2007.
Certain statements contained in this press release constitute
"forward-looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995 and forward
looking information under the provisions of Canadian provincial
securities laws. When used in this document, the words
"anticipate", "expect", "estimate," "forecast," "planned" and
similar expressions are intended to identify forward-looking
statements or information. Such statements and information include
without limitation: statements regarding timing and amounts of
capital expenditures and other assumptions; estimates of future
reserves, resources, mineral production and sales; estimates of
mine life; estimates of future mining costs, cash costs, minesite
costs and other expenses; estimates of future capital expenditures
and other cash needs, and expectations as to the funding thereof;
statements and information as to the projected development of
certain ore deposits, including estimates of exploration,
development and production and other capital costs, and estimates
of the timing of such exploration, development and production or
decisions with respect to such exploration, development and
production; estimates of reserves and resources, and statements and
information regarding anticipated future exploration and
feasibility study results; the anticipated timing of events with
respect to the Company's minesites; statements and information
regarding the sufficiency of the Company's cash resources;
statements and information relating to the Company's bid for
Cumberland; other statements and information regarding anticipated
trends with respect to the Company's capital resources and results
of operations; and statements regarding the timing and benefits of
the Company's proposed acquisition of Cumberland. Such statements
and information reflect the Company's views as at the date of this
press release and are subject to certain risks, uncertainties and
assumptions, and undue reliance should not be placed on such
statements and information. Many factors, known and unknown, could
cause the actual results to be materially different from those
expressed or implied by such forward looking statements and
information. Such risks include, but are not limited to: the
volatility of prices of gold and other metals; uncertainty of
mineral reserves, mineral resources, mineral grades and mineral
recovery estimates; uncertainty of future production, capital
expenditures, and other costs; currency fluctuations; financing of
additional capital requirements; cost of exploration and
development programs; mining risks; risks associated with foreign
operations; risks related to title issues at the Pinos Altos
project; governmental and environmental regulation; the volatility
of the Company's stock price; and risks associated with the
Company's byproduct metal derivative strategies. Moreover the
proposed acquisition of Cumberland involves risks and uncertainties
relating to acquisitions, including, without limitation: the
parties may be unable to obtain regulatory approvals required for
the acquisition; the parties may be unable to complete the
acquisition or completing the acquisition may be more costly than
expected because, among other reasons, conditions to the closing of
the acquisition may not be satisfied; problems may arise with the
ability to successfully integrate the businesses of Agnico-Eagle
and Cumberland; Agnico-Eagle may not be able to achieve the
benefits from the acquisition or it may take longer than expected
to achieve those benefits; and the acquisition may involve
unexpected costs or unexpected liabilities. For a more detailed
discussion of such risks and other factors that may affect the
Company's ability to achieve the expectations set forth in the
forward-looking statements contained in this document, see
Company's Annual Information Form and Annual Report on Form 20-F,
as amended, for the year ended December 31, 2005, as well as the
Company's other filings with the Canadian Securities Administrators
and the U.S. Securities and Exchange Commission. The Company does
not intend, and does not assume any obligation, to update these
forward-looking statements and information. Without limiting the
foregoing, certain of the foregoing statements, primarily related
to projects, are based on preliminary views of the Company with
respect to, among other things, grade, tonnage, processing, mining
methods, capital costs, and location of surface infrastructure and
actual results and final decisions may be materially different from
those currently anticipated. Note to Investors Regarding the Use of
Non-GAAP Financial Measures This press release presents estimates
of future "total cash cost per ounce" and "minesite cost per tonne"
that are not recognized measures under United States generally
accepted accounting principles ("US GAAP"). This data may not be
comparable to data presented by other gold producers. These future
estimates are based upon the total cash costs per ounce and
minesite costs per tonne that the Company expects to incur to mine
gold at the applicable projects and do not include production costs
attributable to accretion expense and other asset retirement costs,
which will vary over time as each project is developed and mined.
It is therefore not practicable to reconcile these forward-looking
non-GAAP financial measures to the most comparable GAAP measure. A
reconciliation of the Company's total cash cost per ounce and
minesite cost per tonne to the most comparable financial measures
calculated and presented in accordance with US GAAP for the
Company's historical results of operations is set forth in the
notes to the financial statements attached hereto and in the
Company's Annual Information Form and Annual Report on Form 20-F,
as amended, for the year ended December 31, 2005, as well as the
Company's other filings with the Canadian Securities Administrators
and the U.S. Securities and Exchange Commission. Notes to U.S.
Investors Regarding the Use of Resources Cautionary Note to
investors concerning estimates of Measured and Indicated Resources.
This press release may use the terms "measured resources" and
"indicated resources". We advise investors that while those terms
are recognized and required by Canadian regulations, the U.S.
Securities and Exchange Commission (the "SEC") does not recognize
them. Investors are cautioned not to assume that any part or all of
mineral deposits in these categories will ever be converted into
reserves. Cautionary Note to investors concerning estimates of
Inferred Resources. This press release may also use the term
"inferred resources". We advise investors that while this term is
recognized and required by Canadian regulations, the SEC does not
recognize it. "Inferred resources" have a great amount of
uncertainty as to their existence, and great uncertainty as to
their economic and legal feasibility. It cannot be assumed that all
or any part of an inferred mineral resource will ever be upgraded
to a higher category. Under Canadian rules, estimates of inferred
mineral resources may not form the basis of feasibility or
pre-feasibility studies, except in rare cases. Investors are
cautioned not to assume that part or all of an inferred resource
exists, or is economically or legally mineable. Detailed Mineral
Reserve and Resource Data
-------------------------------------------------------------------------
Au (000's Tonnes Category and Zone Au(g/t) Ag(g/t) Cu(%) Zn(%) oz.)
(000's)
-------------------------------------------------------------------------
Proven Mineral Reserve
-------------------------------------------------------------------------
LaRonde 2.76 80.96 0.36 4.06 513 5,779
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Goldex 2.25 7 97
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Bousquet 6.30 17 86
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Subtotal Proven Mineral Reserve 2.80 537 5,962
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Probable Mineral Reserve
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LaRonde 2.53 63.53 0.29 3.38 814 10,003
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LaRonde II 5.99 21.73 0.31 0.79 3,824 19,860
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Kittila 5.08 2,616 16,022
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Pinos Altos 3.07 92.77 1,837 18,608
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Lapa 9.08 1,152 3,944
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Goldex 2.29 1,682 22,813
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Subtotal Probable Mineral Reserve 4.06 11,924 91,250
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Total Proven and Probable Mineral Reserves 3.99 12,462 97,213
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Au (000's Tonnes Category and Zone Au(g/t) Ag(g/t) Cu(%) Zn(%) oz.)
(000's)
-------------------------------------------------------------------------
Indicated Mineral Resource
-------------------------------------------------------------------------
LaRonde 1.68 35.14 0.15 2.71 204 3,767
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LaRonde II 3.08 15.72 0.16 0.74 182 1,834
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Kittila 3.95 532 4,191
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Pinos Altos 1.48 61.84 78 1,636
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Lapa 4.15 181 1,354
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Bousquet 5.63 309 1,704
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Ellison 5.68 76 415
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Total Indicated Resource 3.26 1,561 14,901
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Au (000's Tonnes Category and Zone Au(g/t) Ag(g/t) Cu(%) Zn(%) oz.)
(000's)
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Inferred Mineral Resource
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LaRonde 4.51 14.97 0.12 0.85 32 218
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LaRonde II 6.09 28.21 0.50 1.16 990 5,054
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Kittila 5.51 493 2,780
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Pinos Altos 3.03 80.54 506 5,198
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Bousquet 7.45 399 1,667
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Goldex 2.62 721 8,579
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Lapa 7.30 285 1,216
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Ellison 5.81 147 786
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Total Inferred Resource 4.36 3,573 25,498
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Tonnage amounts and contained metal amounts presented in the tables
in this news release have been rounded to the nearest thousand.
Reserves are not a sub-set of resources. Scientific and Technical
Data Agnico-Eagle Mines Limited is reporting mineral resource and
reserve estimates in accordance with the CIM guidelines for the
estimation, classification and reporting of resources and reserves.
Cautionary Note to U.S. Investors - The SEC permits U.S. mining
companies, in their filings with the SEC, to disclose only those
mineral deposits that a company can economically and legally
extract or produce. We use certain terms in this press release,
such as "measured," "indicated," and "inferred," "resources," that
the SEC guidelines strictly prohibit U.S. registered companies from
including in their filings with the SEC. U.S. Investors are urged
to consider closely the disclosure in our Form 20-F/A, which may be
obtained from us, or from the SEC's website at:
http://sec.gov/edgar.shtml. A "final" or "bankable" feasibility
study is required to meet the requirements to designate reserves
under Industry Guide 7. Estimates were calculated using historic
three-year average metals prices and foreign exchange rates in
accordance with the SEC Industry Guide 7. Industry Guide 7 requires
the use of prices that reflect current economic conditions at the
time of reserve determination which Staff of the SEC has
interpreted to mean historic three-year average prices. The
assumptions used for 2006 mineral reserves and resources estimates
reported by the Company were $486 per ounce gold, $8.69 per ounce
silver, $0.89 per pound zinc, $1.99 per pound copper and C$/US$,
US$/Euro, and MXP/US$ exchange rates of 1.21, 1.25 and 11.02
respectively. The Canadian Securities Administrators' National
Instrument 43-101 ("NI 43-101") requires mining companies to
disclose reserves and resources using the subcategories of "proven"
reserves, "probable" reserves, "measured" resources, "indicated"
resources and "inferred" resources. Mineral resources that are not
mineral reserves do not have demonstrated economic viability. A
mineral reserve is the economically mineable part of a measured or
indicated resource demonstrated by at least a preliminary
feasibility study. This study must include adequate information on
mining, processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that economic
extraction can be justified. A mineral reserve includes diluting
materials and allows for losses that may occur when the material is
mined. A proven mineral reserve is the economically mineable part
of a measured resource for which quantity, grade or quality,
densities, shape and physical characteristics are so well
established that they can be estimated with confidence sufficient
to allow the appropriate application of technical and economic
parameters, to support production planning and evaluation of the
economic viability of the deposit. A probable mineral reserve is
the economically mineable part of an indicated mineral resource for
which quantity, grade or quality, densities, shape and physical
characteristics can be estimated with a level of confidence
sufficient to allow the appropriate application of technical and
economic parameters, to support mine planning and evaluation of the
economic viability of the deposit. A mineral resource is a
concentration or occurrence of natural, solid, inorganic or
fossilized organic material in or on the earth's crust in such form
and quantity and of such a grade or quality that it has reasonable
prospects for economic extraction. The location, quantity, grade,
geological characteristics and continuity of a mineral resource are
known, estimated or interpreted from specific geological evidence
and knowledge. A measured mineral resource is that part of a
mineral resource for which quantity, grade or quality, densities,
shape, physical characteristics, can be estimated with a level of
confidence sufficient to allow the appropriate application of
technical and economic parameters, to support mine planning and
evaluation of the economic viability of the deposit. The estimate
is based on detailed and reliable exploration, sampling and testing
information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes that are
spaced closely enough to confirm both geological and grade
continuity. An indicated mineral resource is that part of a mineral
resource for which quantity, grade or quality, densities, shape and
physical characteristics can be estimated with a level of
confidence sufficient to allow the appropriate application of
technical and economic parameters, to support mine planning and
evaluation of the economic viability of the deposit. The estimate
is based on detailed and reliable exploration and testing
information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes that are
spaced closely enough for geological and grade continuity to be
reasonably assumed. An inferred mineral resource is that part of a
mineral resource for which quantity and grade or quality can be
estimated on the basis of geological evidence and limited sampling
and reasonably assumed, but not verified, geological and grade
continuity. The estimate is based on limited information and
sampling gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes. Mineral
resources which are not mineral reserves do not have demonstrated
economic viability. Investors are cautioned not to assume that part
or all of an inferred resource exists, or is economically or
legally mineable. A feasibility study is a comprehensive study of a
mineral deposit in which all geological, engineering, legal,
operating, economic, social, environmental and other relevant
factors are considered in sufficient detail that it could
reasonably serve as the basis for a final decision by a financial
institution to finance the development of the deposit for mineral
production. The qualified person responsible for the LaRonde and
LaRonde II mineral reserve and resource estimate is Francois
Blanchet, Ing., Superintendent of Geology for the LaRonde mine. The
effective date of the estimate is February 21, 2007. The operating
and capital cost assumptions, key assumptions, parameters and
methods that were used to estimate the mineral resources and
reserves are not significantly different as that found in the
Technical Report by Guy Gosselin, P.Geo., that was posted on SEDAR
on March 23, 2005. Issues that might materially affect the LaRonde
and LaRonde II mineral resources and resources are set out in the
Technical Report filed on March 23, 2005. A qualified person, Serge
Levesque, Ing., Superintendent of Technical Services for the Goldex
project, was responsible for the mineral reserve and mineral
resource estimate at the Goldex project. Descriptions of the key
assumptions, parameters and methods used to estimate the mineral
resources and reserves and of any issues which might materially
affect the latter may be found in the Technical Report on the
Estimation of Mineral Resources and Reserves for the Goldex
Extension that was posted on SEDAR on October 27, 2005. The
effective date of the estimate was September 9, 2005. The estimate
reported on February 23, 2006 differs from the previous in that a
minor amount of proven reserves in the form of surface stockpiles
that was measured on December 31, 2006. Although the price
assumptions used to constrain the wireframe models and also to
estimate the mineral resource and reserve on September 9, 2005 are
slightly lower than those currently used, it is the opinion of the
qualified person that the differences are not significant. The
exploration results for Goldex have been prepared and reviewed by a
Qualified Person, Dyane Duquette, P.Geo., Senior Mine Geologist for
the Goldex Mine Project; a description of the data verification
process, the quality assurance program, the quality control
measures, the factors that could affect the data and the analytical
and testing procedures are also presented in the Goldex Technical
Report posted on SEDAR on October 27, 2005. The qualified person
responsible for the Lapa mineral reserve and mineral resource
estimate is Normand Bedard P.Geo., the Superintendent of Technical
Services for the Lapa project. A description of the key
assumptions, parameters and methods used to estimate the mineral
resources and reserves and any issues which might materially affect
the latter may be found in the Technical Report on the Lapa Gold
Project that was posted on SEDAR on June 8, 2006. The effective
date of the estimate is February 21, 2006. The qualified person
responsible for the Kittila mineral resource and mineral reserve
estimate is Marc Legault, the Company's Vice-President, Project
Development. The effective date of the estimate is February 21,
2007. The operating and capital cost assumptions, key assumptions,
parameters and methods that were used to estimate the mineral
resources and reserves are not significantly different as that
found in the Technical Report on the Suurikuusikko project (now the
Kittila mine project) that was posted on SEDAR on March 14, 2006.
There are no known environmental, permitting, legal, title,
taxation, socio-political, marketing, or other relevant issues that
materially affect the Kittila mineral resources or mineral
reserves. The exploration results for Kittila have been prepared
and reviewed by a Qualified Person, Marc Legault, P.Eng., the
Company's Vice-President, Project Development; a description of the
data verification process, the quality assurance program, the
quality control measures, the factors that could affect the data
and the analytical and testing procedures are also presented in the
Suurikuusikko Technical Report posted on SEDAR on March 14, 2006.
The qualified person responsible for the Pinos Altos mineral
resource estimate is Daniel Doucet, Ing., Principal Engineer
Geology for the Company's Technical Services Group, Abitibi
Regional Office. The effective date of the estimate is February 21,
2007. A technical report describing the resource and reserve
estimate will be filed with the securities regulatory authorities
in due course. Wireframe models of zones comprising the Pinos Altos
deposit that were used to estimate the mineral resource were
derived using drill hole intercepts. Gold assays were cut to either
15 grams per tonne or 46 grams per tonne, depending on the rock
type. Silver assays were either not cut, or cut to 2,200 grams per
tonne depending on the rock type. For the open pit resource models
(estimated to a maximum depth of approximately 250 metres,
depending on the zone), a minimum grade cut off of 0.45 grams of
gold equivalent per tonne was used to evaluate drill hole
intercepts that have been adjusted to respect a minimum mining
width of 4.0 metres (horizontal width). For the underground
resource models, a minimum net smelter return cut-off of $28.50 per
tonne was used to evaluate drill hole intercepts that have been
adjusted to respect a minimum mining width of 3.0 metres
(horizontal width). The metallurgical recoveries that averaged
94.6% for gold and 52.9% for silver were used to calculate the gold
equivalent grade. The mineral resource estimate was derived using a
three dimensional block model of the deposit; the grades were
interpolated using the inverse distance power squared method. A
cut-off 0.6 gram of gold equivalent per tonne (after dilution) was
used to determine the open pit reserves while a net smelter return
of $38.0 per tonne was applied to the diluted grade for the
underground reserves. A 10% dilution was applied for the open pit
reserve estimate while a dilution that averaged 13% was applied for
the underground reserve estimate. The same metallurgical recoveries
were used in the estimation of the mineral reserves as for the
mineral resources. The data verification process of historic drill
hole information for Pinos Altos consisted of comparing a selective
amount of primary information in the mineral resource data base
(such as drill hole location, orientation, sample location, assay
result and geological description data) against original records
(such as field drill sites, original survey reports and drill core
descriptions, drill core stored in the library, and assay
laboratory reports). Verification also consisted of reviewing the
historic assay data base and selecting additional samples for check
assaying. The historic drill hole information that was verified
showed acceptable results and only a very small but acceptable
error rate was observed. Although this method of selective
verification suggests that the entire mineral resource data base is
of good quality, there may be errors in the proportion of data that
was not verified. All of the exploration information collected by
the Company (except for the assay results) and inserted into the
mineral resource data base was verified against original records.
The quality of the assay data inserted into the Pinos Altos mineral
resource data base was monitored. The verification methods used do
not eliminate all of the possible errors (for example, sample bias
that can only be verified through additional testing). There are no
known environmental, permitting, legal, title, taxation,
socio-political, marketing, or other relevant issues that
materially affect the Pinos Altos mineral resources. Roger Doucet,
P.Geo., the Company's Exploration Manager for Mexico, who is a
Qualified Person, has prepared and reviewed the exploration results
disclosed in this press release. At Pinos Altos, the diamond
drilling equipment recovers either NQ (48 mm diameter) or HQ (64 mm
diameter) core samples. The drill core selected for analysis was
sawed in half with one half sent to a commercial analytical
laboratory and the other half retained for future reference or use.
Agnico-Eagle has established an Analytical Quality Assurance
Program for sampling at Pinos Altos. This program includes the
systematic addition of blank samples, duplicate samples and
certified standards to each batch of samples sent for analysis to
commercial accredited laboratories. Blank samples are used to check
for possible contamination in the laboratories; duplicate samples
quantify overall precision while certified standards determine the
analytical accuracy. In addition approximately 10% of the assayed
samples are sent to a second certified laboratory for check
analysis. ALS Chemex, an accredited exploration sample analysis
laboratory either collects the split samples directly from the
project site or they are delivered by the Company using a secure
chain of custody procedure. The samples are prepared by ALS Chemex
either in Chihuahua, Chihuahua or Hermosillo, Sonora and the
analysis is done in Vancouver, British Columbia. BSI Inspectorate
an accredited laboratory in Reno, Nevada, re-analyses all of the
samples selected for check assaying. The gold assaying method,
using a 30 gram charge, is by Fire Assay with either an atomic
adsorption finish or, if the result is greater than 3 parts per
million of gold, a gravimetric finish as requested by the project
geologist. Silver analysis, from a 30 gram charge, is either by
three acid digestion followed by atomic absorption or, if the
atomic absorption results is greater than 200 parts per million of
silver by fire Assay with a gravimetric finish as requested. AGNICO
EAGLE MINES LIMITED SUMMARIZED QUARTERLY DATA (thousands of United
States dollars, except where noted - Unaudited) Three months ended
December 31, Year-ended December 31, 2006 2005 2006 2005 ---- ----
---- ---- Income and cash flows Revenues from mining
operations........... $ 138,381 $ 71,392 $ 464,632 $ 241,338
Production costs...... 38,543 33,576 143,753 127,365 -----------
----------- ----------- ----------- Gross profit (exclusive of
amortization shown below)......... 99,838 $ 37,816 320,879 $
113,973 Amortization.......... 7,031 6,592 25,255 26,062
----------- ----------- ----------- ----------- Gross
profit.......... 92,807 $ 31,224 $ 295,624 $ 87,911 -----------
----------- ----------- ----------- ----------- -----------
----------- ----------- Net income for the period .......... $
41,852 $ 11,695 $ 161,337 $ 36,994 Net income per share
(basic)........ $ 0.35 $ 0.13 $ 1.40 $ 0.42 Net income per share
(diluted)...... $ 0.34 $ 0.13 $ 1.35 $ 0.42 Cash flow provided by
operating activities........... $ 84,501 $ 24,622 $ 226,252 $
82,980 Cash flow used in investing activities........... $ (63,601)
$ (30,038) $ (189,508) $ (79,721) Cash flow provided by financing
activities........... $ 4,406 $ 2,416 $ 298,579 $ 11,689 Weighted
average number of common shares outstanding - basic (in
thousands)....... 120,987 97,127 115,461 89,030 Tonnes of ore
milled.. 685,624 673,270 2,673,080 2,671,811 Head grades: Gold
(grams per tonne)......... 3.31 3.20 3.13 3.11 Silver (grams per
tonne)......... 75.26 75.80 76.58 77.50 Zinc................ 4.06%
3.61% 4.13% 4.06% Copper.............. 0.34% 0.39% 0.37% 0.39%
Recovery rates: Gold................ 90.51% 91.07% 91.51% 90.75%
Silver.............. 87.30% 85.80% 87.53% 84.80%
Zinc................ 88.50% 85.00% 87.60% 83.20%
Copper.............. 83.00% 82.50% 82.40% 76.90% Payable
production: Gold (ounces)....... 66,022 63,022 245,826 241,807
Silver (ounces in thousands)......... 1,249 1,234 4,955 4,831 Zinc
(tonnes)....... 20,865 17,535 82,183 76,545 Copper (tonnes).....
1,762 1,967 7,289 7,378 Payable metal sold: Gold (ounces).......
68,993 66,890 256,961 262,429 Silver (ounces in thousands)......
1,227 1,610 4,739 5,221 Zinc (tonnes)....... 22,348 17,444 81,689
75,722 Copper (tonnes)..... 1,769 1,984 7,302 8,521 Realized prices
per unit of metal sold (US$): Gold (per ounce).... $ 594 $ 491 $
622 $ 449 Silver (per ounce).. $ 13.38 $ 9.05 $ 12.42 $ 8.01 Zinc
(per tonne).... $ 4,640 $ 1,818 $ 3,699 $ 1,513 Copper (per
tonne).. $ 6,059 $ 4,882 $ 8,186 $ 4,376 Total cash costs (per
ounce) (US$): Production costs...... $ 584 $ 532 $ 585 $ 527 Less:
Net byproduct revenues............. (1,475) (611) (1,240) (511)
Inventory adjustments........ 33 59 (31) 29 Accretion expense and
other.......... (10) (2) (4) (2) ----------- -----------
----------- ----------- Total cash costs (per ounce)(3)....... $
(868) $ (22) $ (690) $ 43 ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Minesite costs per tonne milled (C$)(1)....... C$63 $ 56 C$62 $ 55
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- -------------- (3) Total cash
costs (per ounce) and minesite costs per tonne milled are non-GAAP
measures. For a reconciliation of these measures to the financial
statements, see note 1 to these financial statements. AGNICO EAGLE
MINES LIMITED COMPARATIVE CONDENSED FINANCIAL INFORMATION
(thousands of United States dollars - Unaudited) As at As at
December 31, December 31, 2006 2005 ----------- ----------- ASSETS
Current Cash and cash equivalents..................... $ 458,617 $
120,982 Metals awaiting settlement.................... 84,987
56,304 Income taxes recoverable...................... - 7,723 Other
taxes recoverable....................... 16,327 6,794 Inventories:
Ore stockpiles.............................. 2,330 12,831
Concentrates................................ 3,794 920
Supplies.................................... 11,152 10,092 Other
current assets.......................... 45,626 27,689 -----------
----------- Total current assets............................
622,833 243,335 Other assets....................................
7,737 7,995 Future income and mining tax assets............. 1,272
63,543 Property, plant and mine development............ 859,859
661,196 ----------- ----------- $1,491,701 $ 976,069 -----------
----------- ----------- ----------- LIABILITIES AND SHAREHOLDERS'
EQUITY Current Accounts payable and accrued liabilities......
42,538 37,793 Dividends payable............................. 15,166
3,809 Income taxes payable.......................... 14,231 -
Interest payable.............................. - 2,243 Fair value
of derivative financial instruments........................ - 9,699
----------- ----------- Total current
liabilities....................... 71,935 53,544 -----------
----------- Long-term debt.................................. -
131,056 ----------- ----------- Reclamation provision and other
liabilities..... 27,457 16,220 ----------- ----------- Future
income and mining tax liabilities........ 139,904 120,182
----------- ----------- Shareholders' equity Common shares
Authorized - unlimited Issued - 121,025,635 (December 31, 2005 -
97,836,954)............. 1,230,654 764,659 Stock
options................................... 5,884 2,869
Warrants........................................ 15,723 15,732
Contributed surplus............................. 7,181 7,181
Retained earnings (Deficit)..................... 3,015 (138,697)
Accumulated other comprehensive income (loss)... (10,052) 3,323
----------- ----------- Total shareholders'
equity...................... 1,252,405 655,067 -----------
----------- $1,491,701 $ 976,069 ----------- -----------
----------- ----------- AGNICO EAGLE MINES LIMITED COMPARATIVE
CONDENSED FINANCIAL INFORMATION (thousands of United States dollars
except share and per share amounts - Unaudited) Three months ended
December 31, Year-ended December 31, 2006 2005 2006 2005 ---- ----
---- ---- REVENUES Revenues from mining operations........... $
138,381 $ 71,392 $ 464,632 $ 241,338 Interest and sundry
income............... 5,153 (3,180) 21,797 4,535 Gain on sale of
available-for-sale securities........... 1,143 361 24,118 461
----------- ----------- ----------- ----------- 144,677 68,573
510,547 246,334 COSTS AND EXPENSES Production............ 38,543
33,576 143,753 127,365 Loss on derivative financial
instruments.......... 2,136 4,023 15,148 15,396 Exploration and
corporate development.......... 10,271 6,158 30,414 16,581 Equity
loss in junior exploration companies............ - 342 663 2,899
Amortization.......... 7,031 6,592 25,255 26,062 General and
administrative....... 9,503 3,044 26,175 11,727 Provincial capital
tax.......... 2,132 55 3,758 1,352 Interest.............. 688 586
2,611 7,813 Foreign currency loss (gain).......... (7,428) 1,948
2,127 1,860 ----------- ----------- ----------- ----------- Income
before income, mining and federal capital taxes................
81,801 12,249 260,643 35,279 Federal capital tax... - 334 - 1,062
Income and mining tax expense (recovery)........... 39,949 220
99,306 (2,777) ----------- ----------- ----------- ----------- Net
income for the period........... $ 41,852 $ 11,695 $ 161,337 $
36,994 ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- Net income per share -
basic........ $ 0.35 $ 0.13 $ 1.40 $ 0.42 ----------- -----------
----------- ----------- ----------- ----------- -----------
----------- Net income per share - diluted...... $ 0.34 $ 0.13 $
1.35 $ 0.42 ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- Weighted average
number of shares outstanding (in thousands) Basic...............
120,897 97,127 115,461 89,030 Diluted............. 124,578 97,610
119,142 89,513 AGNICO EAGLE MINES LIMITED COMPARATIVE CONDENSED
FINANCIAL INFORMATION (thousands of United States dollars -
Unaudited) Three months ended December 31, Year-ended December 31,
2006 2005 2006 2005 ---- ---- ---- ---- Operating activities Net
income for the period........... $ 41,852 $ 11,695 $ 161,337 $
36,994 Add (deduct) items not affecting cash: Amortization........
7,031 6,592 25,255 26,062 Future income and mining taxes.......
36,884 220 81,993 (2,777) Unrealized loss on derivative
contracts.......... 3,545 4,023 - 8,335 Gain on sale of
available-for- sale securities.... (1,143) (361) (24,118) (461)
Gain on Contact Diamond Corporation........ - - (7,361) -
Amortization of deferred costs and other.......... (5,511) 405
27,311 7,475 Changes in non-cash working capital balances Metals
awaiting settlement......... (4,905) (10,176) (28,683) (12,862)
Fair value of derivative financial instruments........ (8,905) -
(27,023) - Income taxes recoverable........ 7,480 (177) 21,954
8,382 Other taxes recoverable........ (4,138) - 217 -
Inventories......... 767 (1,341) (2,493) 2,550 Other current
assets............. (422) (165) (4,639) (1,054) Accounts payable
and accrued liabilities........ 11,966 12,472 4,745 10,519 Interest
payable.... - 1,435 (2,243) (183) ----------- -----------
----------- ----------- Cash provided by operating
activities........... 84,501 24,622 226,252 82,980 -----------
----------- ----------- ----------- Investing activities Additions
to mining properties.... (53,282) (25,382) (149,185) (70,270)
Acquisitions, investments and other............ (10,319) (4,656)
(40,323) (9,451) ----------- ----------- ----------- -----------
Cash used in investing activities........... (63,601) (30,038)
(189,508) (79,721) ----------- ----------- ----------- -----------
Financing activities Dividends paid........ - - (3,166) (2,525)
Short-term debt....... - - - Proceeds from common shares
issued........ 4,406 2,416 301,745 14,214 ----------- -----------
----------- ----------- Cash provided by financing
activities........... 4,406 2,416 298,579 11,689 -----------
----------- ----------- ----------- Effect of exchange rate changes
on cash and cash equivalents.......... 2,428 25 2,312 20
----------- ----------- ----------- ----------- Net increase
(decrease) in cash and cash equivalents during the
period........... 27,734 (2,975) 337,635 14,968 Cash and cash
equivalents, beginning of period.. 430,883 123,957 120,982 106,014
----------- ----------- ----------- ----------- Cash and cash
equivalents, end of period............ $ 458,617 $ 120,982 $
458,617 $ 120,982 ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- Other operating
cash flow information: Interest paid during the period........... $
487 $ 7 $ 3,923 $ 8,304 ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- Income,
mining and capital taxes paid (recovered) during the period $ 173 $
217 $ 1,405 $ (6,259) ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- Note 1:
Reconciliation of Total Cash Costs Per Ounce and Total Minesite
Costs Per Tonne Three months ended (thousands of dollars, December
31, Year-ended December 31, except where noted) 2006 2005 2006 2005
---- ---- ---- ---- Cost of production per Consolidated Statements
of Income $ 38,543 $ 33,576 $ 143,753 $ 127,365 Adjustments:
Byproduct revenues (97,399) (38,523) (304,818) (123,450) Inventory
adjustment(i) 2,161 3,693 (7,606) 6,991 Non-cash reclamation
provision (603) (109) (936) (429) ----------- -----------
----------- ----------- Cash operating costs.. $ (57,298) $ (1,363)
$ (169,607) $ 10,477 ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- Gold
production (ounces) 66,022 63,022 245,826 241,807 -----------
----------- ----------- ----------- ----------- -----------
----------- ----------- Total cash costs (per ounce)(ii) $ (868) $
(22) $ (690) $ 43 ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- Three months ended
(thousands of dollars, December 31, Year-ended December 31, except
where noted) 2006 2005 2006 2005 ---- ---- ---- ---- Cost of
production per Consolidated Statements of Income $ 38,543 $ 33,576
$ 143,753 $ 127,365 Adjustments: Inventory adjustments(iii) (318)
(1,221) 2,494 (4,751) Non-cash reclamation provision (603) (109)
(936) (429) ----------- ----------- ----------- -----------
Minesite operating costs (US$) $ 37,622 $ 32,246 $ 145,311 $
122,185 ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- Minesite operating costs (C$) $
42,868 $ 37,848 $ 164,459 $ 147,834 ----------- -----------
----------- ----------- ----------- ----------- -----------
----------- Tonnes of ore milled (000's tonnes)....... 686 673
2,673 2,672 ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- Minesite costs per
tonne (C$)(iv)....... $ 63 $ 56 $ 62 $ 55 ----------- -----------
----------- ----------- ----------- ----------- -----------
----------- --------------- Notes: (i) Under the Company's revenue
recognition policy, revenue is recognized on concentrates when
legal title passes. Since total cash costs are calculated on a
production basis, this inventory adjustment reflects the sales
margin on the portion of concentrate production for which revenue
has not been recognized in the period. (ii) Total cash costs per
ounce is not a recognized measure under US GAAP and this data may
not be comparable to data presented by other gold producers. The
Company believes that this generally accepted industry measure is a
realistic indication of operating performance and is useful in
allowing year over year comparisons. As illustrated in the table
above, this measure is calculated by adjusting Production Costs as
shown in the Consolidated Statements of Income and Comprehensive
Income for net byproduct revenues, royalties, inventory adjustments
and asset retirement provisions. This measure is intended to
provide investors with information about the cash generating
capabilities of the Company's mining operations. Management uses
this measure to monitor the performance of the Company's mining
operations. Since market prices for gold are quoted on a per ounce
basis, using this per ounce measure allows management to assess the
mine's cash generating capabilities at various gold prices.
Management is aware that this per ounce measure of performance can
be impacted by fluctuations in byproduct metal prices and exchange
rates. Management compensates for the limitation inherent with this
measure by using it in conjunction with the minesite costs per
tonne measure (discussed below) as well as other data prepared in
accordance with US GAAP. Management also performs sensitivity
analyses in order to quantify the effects of fluctuating metal
prices and exchange rates. (iii) This inventory adjustment reflects
production costs associated with unsold concentrates. (iv) Minesite
costs per tonne is not a recognized measure under US GAAP and this
data may not be comparable to data presented by other gold
producers. As illustrated in the table above, this measure is
calculated by adjusting Production Costs as shown in the
Consolidated Statements of Income and Comprehensive Income for
inventory and hedging adjustments and asset retirement provisions
and then dividing by tonnes processed through the mill. Since total
cash costs data can be affected by fluctuations in byproduct metal
prices and exchange rates, management believes this measure
provides additional information regarding the performance of mining
operations and allows management to monitor operating costs on a
more consistent basis as the per tonne measure eliminates the cost
variability associated with varying production levels. Management
also uses this measure to determine the economic viability of
mining blocks. As each mining block is evaluated based on the net
realizable value of each tonne mined, in order to be economically
viable the estimated revenue on a per tonne basis must be in excess
of the minesite costs per tonne. Management is aware that this per
tonne measure is impacted by fluctuations in production levels and
thus uses this evaluation tool in conjunction with production costs
prepared in accordance with US GAAP. This measure supplements
production cost information prepared in accordance with US GAAP and
allows investors to distinguish between changes in production costs
resulting from changes in production versus changes in operating
performance. Meadowbank Project - Reserves and Resources Open Pit
Mineral Reserve (Proven & Probable) (Fourth Quarter 2005)
-------------------------------------------------------------------------
Category Tonnes Grade (g/t) Ounces
-------------------------------------------------------------------------
Proven 3,020,000 4.8 470,000
------------------------------------------------- Probable
18,300,000 4.1 2,420,000
-------------------------------------------------------------------------
Proven & Probable 21,320,000 4.2 2,890,000
-------------------------------------------------------------------------
Note: 95% mining recovery and contact dilution applied. Reserves
are a subset of Measured and Indicated Resources. 2007 Mineral
Resource (including Cannu Zone) (Jan. 2007)
-------------------------------------------------------------------------
Deposit Category Tonnes Grade (g/t) Ounces
-------------------------------------------------------------------------
Portage Measured 2,800,000 5.4 480,000
------------------------------------------------- (including Cannu
Zone) Indicated 9,000,000 5.1 1,460,000
------------------------------------------------- Sub-Total
11,800,000 5.1 1,940,000
------------------------------------------------- Inferred 700,000
4.7 100,000
-------------------------------------------------------------------------
Goose island Measured
------------------------------------------------- Indicated
2,240,000 6.5 470,000
------------------------------------------------- Sub-Total
2,240,000 6.5 470,000
------------------------------------------------- Inferred
1,370,000 4.2 190,000
-------------------------------------------------------------------------
Vault Measured -------------------------------------------------
Indicated 8,610,000 3.9 1,080,000
------------------------------------------------- Sub-Total
8,610,000 3.9 1,080,000
------------------------------------------------- Inferred 870,000
5.4 150,000
-------------------------------------------------------------------------
PDF Inferred 507,000 4.5 73,000
-------------------------------------------------------------------------
Total Measured 2,800,000 5.4 480,000
------------------------------------------------- Indicated
19,850,000 4.7 3,010,000
------------------------------------------------- Total 22,650,000
4.8 3,490,000
-------------------------------------------------------------------------
(not included in above) Inferred 3,447,000 4.6 513,000
-------------------------------------------------------------------------
Note: Grade rounded to nearest 0.1 g/t. Numbers may not add due to
rounding. (x) The PDF inferred mineral resource estimate was
prepared by Cumberland. Technical Data Meadowbank open pit mineral
reserves (Q4/2005) have been prepared in accordance with NI 43-101.
Dr. Mike Armitage, Managing Director of SRK Consulting (UK)
Limited, is the independent Qualified Person responsible for
preparation of stated reserves. Meadowbank mineral resources
(Q4/05) were prepared in accordance with the requirements set out
in NI 43-101 under the direction of Dr. Mike Armitage, Managing
Director of SRK Consulting (UK) Limited, who is an independent
Qualified Person as defined by NI 43-101 The PDF deposit resource
estimates (Aug. 2000) were prepared by Cumberland in accordance
with standards outlined in National Instrument 43-101 and CIM
Standards on Mineral Resources and Reserves (August 2000). James
McCrea, P.Geo., Manager, Mineral Resources for Cumberland, is the
Qualified Person under NI 43-101. PDF deposit resources are not
included in the feasibility study of the Meadowbank project. The
Cannu mineral resource estimate (Jan. 2007) was prepared in
accordance with the requirements set out in NI 43-101 under the
direction of Dr. Mike Armitage, Managing Director of SRK Consulting
(UK) Limited, who is an independent Qualified Person as defined by
NI 43-101. The Cannu zone resources are not included in the
feasibility study of the Meadowbank project. To the best of
Agnico-Eagle's knowledge, the Cumberland estimate is relevant and
reliable. DATASOURCE: Agnico-Eagle Mines Limited CONTACT: David
Smith, VP, Investor Relations, (416) 947-1212
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